May 20, 2009, Montreal – Bombarded from all sides with proposals for payroll
tax increases, Quebec employers, represented by the Conseil du patronat du
Québec (CPQ), are calling on governments to put a cap on this portion of the tax
burden, which is already much heavier in Quebec than elsewhere in Canada.
"The time for a proper debate on this
subject has come," said the CPQ's new president, Yves-Thomas Dorval.
"Governments must stop dealing with these taxes one at a time in
isolation. Each new levy may seem minor, but the overall burden imposed by
payroll taxes must be considered. Governments, particularly the Quebec
government, must make choices and set priorities between the various plans that
are funded by these taxes."
A disadvantage for Quebec businesses
Taxing salaries at higher levels than our
neighbours makes Quebec businesses less competitive. As demonstrated by a CPQ
Backgrounder given today to all members of the National Assembly, Quebec costs
employers and employees the most of any province in Canada.
The gap with Ontario is 31% on a salary of
$40 000. This is also true for other salary levels, particularly between $15
000 and $45 000. And the gap increases for the best-paid workers, mainly due to
the health services fund, whose rates are considerably higher in Quebec.
All payroll taxes combined add 10% to the
cost of salaries paid by employers to Quebec workers. In absolute costs,
businesses pay more than $15 billion each year for these taxes. To put this
into perspective, this is more than the Government of Quebec receives from all
consumption taxes.
Implement the Fortin Report
The CPQ's proposal to stabilize the payroll
tax level is not revolutionary. The government's Groupe de travail sur
l'investissement des entreprises, chaired by economist Pierre Fortin, made this
recommendation in its final report published in March 2008, prior to the
current recession.
"Given that we are now in the middle
of a downturn, that considerable increases to payroll taxes are being discussed
this month, and that businesses must continue paying these taxes whether they
make profits or not, the implementation of this recommendation is more urgent
than ever," said Mr. Dorval.
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